From 1 January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM, Regulation (EU) 2023/956, as amended by Regulation (EU) 2025/2083) entered its definitive phase: covered goods — including iron, steel and aluminium — imported into the EU must be declared with their “embedded” emissions, and the importer must surrender corresponding CBAM certificates. FDI exporters in Vietnam do not surrender certificates themselves, but they are the ones who must supply the emissions number — and that number decides whether their price stays competitive.
How embedded emissions are calculated
The principle is actual emissions of the producing installation, determined per production route for each goods type: total direct emissions (and, for some goods, indirect emissions from electricity consumed) at the installation’s emission points, divided by the output of the corresponding goods, giving embedded emissions in tonnes of CO2e per tonne of product. The data must come from a monitoring system at the plant (emission factors of fuels, carbon-containing materials, activity data) — which is why exporters need to build measurement systems now, in parallel with domestic GHG inventories (see FDI-LC-2041). Where reliable actual data does not exist, the importer must use default values issued by the European Commission, constructed adversely: based on the average emission intensity of the highest-emitting exporting countries plus a mark-up — using defaults is almost always more expensive than the actual figure of a well-run plant. Good news for small exporters: the 2025 amendment introduced a de minimis exemption of 50 tonnes per year, cumulative per importer (for steel, aluminium, cement and fertilisers; not for electricity and hydrogen) — below that threshold, CBAM obligations do not arise. Two dates importers and exporters must know: the CBAM declarant must be an authorised CBAM declarant — applications filed before 31 March 2026 may continue importing while the decision is pending; and the first annual CBAM declaration (for 2026 imports) is due by 30 September 2027, with certificate sales starting 1 February 2027, the 2026 price set by the quarterly weighted average of EU ETS auction prices (weekly from 2027), and from 2027 declarants holding at quarter-end certificates covering at least 50% of the embedded emissions of goods imported that year.
How much does CBAM add to cost — and what can be deducted
There is no fixed statutory percentage: the cost uplift depends on three variables belonging to the plant itself and the calendar. The core formula: CBAM cost per tonne of product = embedded emissions (tCO2e/tonne) × CBAM certificate price (≈ the EU ETS price) × the phasing-in CBAM factor — only 2.5% in 2026, rising year by year to 100% in 2034 as EU ETS free allocation is phased out. For steel and aluminium, emission intensity varies enormously by technology (blast furnace versus electric arc furnace, scrap ratio, electricity source), so two exporters under the same goods code can face CBAM costs differing several-fold. Two cost reducers to use: (1) a carbon price actually paid in the country of origin is deducted from the certificate obligation once Vietnam operates a real carbon price (detailed rules apply from 2027) — one more reason to track the domestic carbon market closely; (2) actual data instead of default values, as above. On who bears the cost: the legal obligation sits with the EU importer (the authorised declarant), but commercial reality pushes most of it back to suppliers through price negotiation — a CBAM cost-sharing clause and an emissions-data supply duty, with third-party verification where the importer requires it, belong in export contracts now.
Frequently asked questions
From when does CBAM apply to steel and aluminium exports to the EU?
The definitive CBAM phase began on 1 January 2026 under Regulation (EU) 2023/956 (as amended by Regulation (EU) 2025/2083): authorised declarants, embedded-emissions declarations and certificate surrender. The first annual declaration, for 2026 imports, is due by 30 September 2027; certificate sales start on 1 February 2027.
By roughly what percentage does CBAM raise steel/aluminium costs?
There is no fixed percentage. Cost per tonne = the plant’s own embedded emissions × the certificate price (linked to the EU ETS) × the phasing-in CBAM factor (2.5% in 2026 rising to 100% in 2034). Clean-technology plants pay far less than those stuck with default values — your own number requires your actual emissions data.
How is CBAM declared if there is no emissions data?
The importer must use EU default values — constructed adversely (average of the highest-emitting exporting countries plus a mark-up). Commercially, an exporter who cannot supply credible emissions data will be price-squeezed or lose orders to competitors with lower actual data.
Is a carbon price paid in Vietnam deducted from CBAM?
Yes — a carbon price actually paid in the country of origin is deducted from the CBAM certificate obligation (detailed rules from 2027). At present Vietnam has no actual mandatory carbon price to deduct, so this is a factor to track alongside the domestic carbon market (see FDI-LC-2041).
This article has been quality-reviewed by the FLAW AI Legal Council